The Odd Couple
The Odd Couple
Delaware and Public Benefit Corporations
Public Benefit Corporations (“PBCs”) are a revolutionary new form of business organization that overturn the fundamental corporate principle of shareholder wealth maximization. Of the many questions that surround this new entity type, perhaps the most perplexing is why Delaware – the most influential and important state for corporate law by far – chose to adopt it. I explore this troubling question through qualitative empirical research. I find that Delaware primarily wanted to serve the needs of social entrepreneurs and financiers, but also hoped to harness the power of capitalism to remedy social ills that government has so far failed to fix. The PBC statute rather poorly implements either of these goals. The PBC statute is not a very good enforcement tool. On the other hand, the statute may prove an effective reinforcement tool, aiding sincere social entrepreneurs to pursue their various missions. Also, private ordering, such as certification by outside entities like B Lab, may fill many of the important gaps left by the law.
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